Lower tax rates result in higher tax collections

This is an argumentative text from Applia's chairman Kent Oderud with the aim of influencing.

Listen and be amazed – the ceiling for the electronics tax amount per product is being reduced by 1.6 percent as of July 1 this year. This is to compensate for the other changes to the right to deduct that are taking place on the same date. But is there any compensation at all through this reduction?

Crowns	Tax rate 2022	Tax rate 1 Jan.	Tax rate from July 1

Ceiling, SEK/product	457	497	489
White goods SEK/kg	11	12	11
Other electronics SEK/kg	166	181	160

The ceiling, that is, the maximum tax for a product that must then weigh just over 44 kg and above, which most white goods do, is lowered from SEK 497 to SEK 489. Note, however, that this is still a significant increase compared to the 2022 ceiling of SEK 457.

For other electronics, it is sufficient for the product to weigh 3 kg to reach the ceiling. The weights that apply are the net weights of the products without packaging but with any accessories that are delivered together included in the weight.

Deductions for reactively added substances disappear

The other changes to the electronics tax that the Riksdag has decided on by 1 July this year concern restrictions on the possibilities for deductions for taxable products. The previously possible deductions for Reactively added flame retardants will disappear on this date. Now it is only the presence of chlorine, bromine and/or phosphorus that determines the tax liability. Regardless of whether it is additive or reactively added flame retardants.

Reactively added flame retardants are considered an environmentally better solution and were therefore eligible for tax deductions from 2017 when the tax was introduced in Sweden. Now that is over.

This means that almost all possibilities for deductions disappear from July 1. For white goods, this means that almost all deductions disappear, that is, the previous 50 percent deductions will become 0 percent (i.e. 100 percent tax), and the few 90 percent deductions will become at most 50 percent or 0 percent. This is because the deductions have so far been largely based on reactively added funds.

1.6 billion becomes 2.6 billion

The government has clearly declared in the budget bill for 2023 that these changes will not increase tax collection. The 1.6 percent reduction in the tax cap would guarantee this. However, this is definitely not the case. Instead, together with other taxable industries, we have calculated that the new tax outcome will increase from 1.6 billion from 2022 to 2.6 billion on an annual basis going forward. We are working with several industry bodies to bring about a change in this and I quote our colleagues in the Electronics Industry, who describe the situation well on their website:

”"”Our meetings with officials at the Government Offices have shown that the impact assessment for the budget proposal has not been done correctly, which has resulted in this gross misjudgment. Neither the Swedish Tax Agency nor the Swedish Customs have been able to provide any statistics on the proportion affected by the changes, and no dialogue has been held with companies in the industry to obtain facts.”

The Swedish Tax Agency's official information about the tax changes from July 1st can be found here. here.

The compensation is almost ridiculous

The conclusions are now that the compensation of tax rates on July 1 is almost ridiculous and that the government is not delivering on its promises to abolish the electronics tax. Tax revenues are apparently more important than a credible environmental policy.

The environmental impact has not materialized.
The government does not deliver
Sweden's consumers pay

The electronics tax is not only harmful to the industry and Sweden's consumers, but is also an example of political greenwashing that contributes to undermining trust in Swedish environmental policy. A harmful Swedish special taxation that does not provide the environmental benefit it aims for must be abolished.

Kent Oderud, Chairman APPLiA Sweden

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